In light of the Memorial Day weekend storms, straight-line winds and tornadoes that have affected our Northwest Arkansas communities, we wanted to provide some important information regarding IRS tax relief and the qualified disaster loss rules that may apply to you.
IRS Postpones Certain Deadlines
The IRS has announced that they will postpone certain tax filing and tax payment deadlines for individuals and businesses in Arkansas that were affected by severe storms, straight-line winds, tornadoes, and flooding that occurred on Memorial Day weekend. Individuals and households that reside or have businesses in Baxter, Benton, Boone and Marion counties qualify for tax relief. These taxpayers now have until Nov. 1, 2024, to file various federal individual and business tax returns and make tax payments.
The November 1, 2024, deadline will also apply to any payment normally due during this period, including the quarterly estimated tax payments due on June 17, 2024, and September 16, 2024, and the quarterly payroll and excise tax returns normally due on July 31, 2024, and October 31, 2024. In addition, penalties on payroll and excise tax deposits due after May 26, 2024, and before June 10, 2024, will be abated as long as the tax deposits are made by June 10, 2024.
In Arkansas, Governor Sanders has extended the deadline to make quarterly estimated tax payments to August 31, 2024.
Qualified Disaster Losses
A Qualified Disaster Loss is a tax deduction that applies to personal casualty losses resulting from incidents that have been federally declared as disasters. This provision is designed to offer financial relief by allowing affected taxpayers to deduct certain unreimbursed losses that are not covered by insurance.
Here are some key points to consider:
- Deduction Rules: Personal property losses can be deducted if they are not compensated by insurance. Business property losses follow different regulations.
- Deduction Limits: Typically, personal losses are deductible only if they exceed $100 and total more than 10% of your Adjusted Gross Income (AGI). However, for Qualified Disaster Losses, the floor is $500, and the 10% AGI threshold is waived.
- Claiming the Deduction: Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either the year in which the event occurred or the prior year. Taxpayers choosing to claim their losses on their 2023 return have extra time, until Oct. 15, 2025, to make this election. See the IRS’s instructions for casualties here for additional information.
Additional Assistance
Given the complexity of these rules, we are here to assist you through every step of the process. Please do not hesitate to reach out if you have any questions or need help calculating your losses. Our team is here to assist you through these challenging times and ensure that you receive the support you need.
Stay safe, and please let us know how we can support you during this challenging time.